An Introduction to Six Bridges Negotiation

Commercial Strategy Consultants for the Life Sciences Industry

A Path to Shared Commitment

in Value-Based Negotiations

Success in high stakes, value-based negotiations is not an accident.

The “negotiating arena” is where we find revenue, profit, and jobs at great risk. The outcome of a negotiation impacts the entire organization. The impact extends to the financial and operational health of the organization and the job security of colleagues.

In life sciences, the stakes are higher. A negotiation between a life science company and a provider or payor will impact the treatment options for a condition or disease, thereby potentially impacting thousands of people with a chronic disease or hundreds impacted by a rare condition with limited treatment options.

For life science account leaders, the “negotiating arena” is where the account leader can have his/her greatest impact on the organization. The profits at stake per dedicated minute to negotiating suggest that very few are more valuable to their organization than those seeking to establish access or a preferred position for a pharmaceutical, medical device, or healthcare technology product with a payor or provider.

2 Six Bridges Negotiation

For organizations and individuals, the negotiating arena is uniquely revealing, inspiring, and humbling. It is not a place for the unprepared.

Discovery Points

Introducing Six Bridges 4

Impact of Shared Influence 6

Required Response 8

Expectations 10

Biography 11

Furthermore, the negotiation process is also quite revealing for the business. The learnings gained via the negotiation process quite often reveal opportunities for sustained competitive advantage. The process may also identify unforeseen product or operational benefits for the customer or opportunities to evolve of product with specific customer types. In many respects, the value of the organization is the sum of its meaningful conversations with potential and current customers. Igniting and sustaining meaningful conversation is fundamental to successful negotiations.

A negotiation with a payor, provider, or value chain partner challenges the life science company to address fundamental questions facing its business.

Do we, as a life science organization, understand the current,

evolving and future needs of the market and its participants?

Have we effectively positioned our product(s) with respect to the

clinical, economic, and operational priorities operating across

the value chain?

Does our message distinguish our competencies, commitment,

and our culture?

Is the customer clinically, operationally, and culturally aligned

towards shared priorities?

Does our value proposition translate to shared commitment with

the customer?

Reveal opportunities for sustained competitive advantage.

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“Very few are more valuable to

their organization than those

seeking to establish access or a

preferred postion with a payor

or provider.”

Introducing Six Bridges! The path to finding shared commitment in value-based negotiations.

The Six Bridges path equips executive teams in life sciences to thrive in the age of accountability and value-based care. Organizations deploying Six Bridges negotiation training will develop deeper, more meaningful conversations with customers, suppliers, and partners. From a balance sheet perspective, the return on investment in Six Bridges will be found in:1. Greater profitability, a result of improving the organization’s focus on high potential market segments;2. Accelerated top-line growth by increasing the organization’s realized share of revenue potential with customers;3. Optimized resource allocation by customer; 4. Improved productivity across the account executive team; and 5. Expanded market share by creating and identifying points of differentiation with customers, suppliers and partners (i.e. distributors), including product and service opportunities with the market segment or customer type.

4 Six Bridges Negotiation

Bridge Purpose

Intelligence Define policy and market forces impacting stakeholders in the ecosystem and in the therapeutic segment, including patients, providers, payors, suppliers, and/or distributors.

Inventory Capture unique competencies of the organization (relative to competitors) by function, including manufacturing, marketing, clinical and customer support.

Interrogate Understand (and influence) the opportunities, issues, and needs unique to the customer and the process milestones specific to the negotiation.

Insight Assess the accumulated intelligence for the ecosystem, market, organization, and customer to arrive at the desired clinical, economic, and operational position.

Inspire Translate the organization’s competencies and commitments into advantage for the client and the client’s stakeholders.

Invest Present the clinical, economic, and operational offer components supported by a tactical plan to support the launch of the agreement.

Six Bridges Negotiation: Path and purpose

Six Bridges | Intelligence

Inventory

Interrogate

Insight

Inspire

Invest

The intended audience for Six Bridges is pharmaceutical, medical device, and life science professionals responsible for positioning their organization and their product portfolio with healthcare decision makers, influencers, suppliers, and distributors. Candidates for Six Bridges Negotiation training include:

• Accountexecutivesresponsiblefornegotiatingagreementswithpayors, benefit managers (pharmacy and medical device), health systems, and retailers; • Salesleadersresponsibleforthepull-throughofnegotiatedagreements;• Marketersresponsiblefordevelopingthepositioning,pricing,promotionand messaging strategy for the organization’s brand(s) in managed markets; and • C-levelexecutivesresponsiblefortheacquisitionordisposalofassetsand securing favorable relationships across the value chain (suppliers, wholesalers, distributors).

All training sessions are customized to the opportunities and challenges facing the client organization to ensure the training translates to the client’s negotiating arena.

Six Bridges executive working sessions equip leadership teams to develop the strategic and tactical response to a unique opportunity or a critical threat to the business. The working sessions utilize the Six Bridges path to achieve clarity with respect to the strategy and actions the organization will undertake to seize the opportunity or mitigate the threat. Six Bridges executive working sessions are conducted over a 1- or 2-day roundtable with members of the executive team. Advanced preparation is conducted by the Hix Group with senior leadership. The advance preparation typically represents a 90-minute commitment on the part of select members of the leadership team.

Leaders seeking to inquire about a Six Bridges Negotiation training or executive working sessions can message the Hix Group at info@hix.group.

Six Bridges negotiation training is the Hix Group’s proven

approach to equipping life science companies to successfully

negotiate enterprise-to-enterprise, value-based agreements

with customers, suppliers and partners.

5

The impact of shared influence on value-based healthcare markets.

Healthcare delivery is undergoing accelerated transformation to value-based care models. The continuous migration to “value” is having a profound effect on the economic consequences for all stakeholders in the healthcare ecosystem, including the life science company.

Consider ...

The healthcare consumer has rapidly migrated to healthcare benefit

designs characterized by increased patient responsibility. According

to the Kaiser Family Foundation, High-deductible Health Plans (HDHPs)

now represent 31 percent of all benefit designs, up from 6 percent

in 2006.

The increase in patient responsibility has produced the emergence

of the educated patient. The educated patient can be found playing

an active role in influencing the care they receive from a hospital,

physician, or ancillary care provider. As a result, physicians are

increasingly viewed as “health coach” and less as “health conductors”.

This evolution in the role of the physician has occurred in part due to

the significant time constraints on the physician in his/her face-to-face

encounters with patients.

The value-based paradigm in healthcare means

that influence has become much more fluid, with

each stakeholder possessing the ability to influence

the context of a negotiation between a life science

company and a payor, provider, and/or partner.

6 Six Bridges Negotiation

Providers are increasingly being placed at-risk for the care provided. As a

result, payors are implementing major structural changes in their financial

relationship with health systems. These changes emphasize and reward

positive clinical outcomes, quality control, and risk-sharing.

In turn, providers (or health systems) are restructuring their

agreements with physicians to include quality and outcome incentives.

This represents a major shift from the salary and productivity-based

compensation emphasis that dominated the provider-physician financial

relationship prior to the last decade.

Employers facing increased foreign competition in a global economy

are shifting greater responsibility to the employee. Global competition

and the consistent rise in healthcare cost above and beyond the rise

in the consumer price index has fueled the migration to HDHPs. Today,

healthcare represents 20 percent of the GDP, versus 5 percent in 1960.

Changes to the economic incentives across healthcare is the driving force in the transformation of healthcare delivery and the changing roles and influence of each stakeholder. The new paradigm in healthcare means that influence has become much more fluid, with each stakeholder possessing the ability to influence the context of a negotiation between a life science company and a payor, provider, and/or partner.

“The continuous migration

to value is having a

profound impact on the

economic consequences

for all stake-holders in the

healthcare ecosystem.”

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The required response for life science companies operating in a value-based ecosystem.

Some things never change. Acquisition cost remains a significant and easily identifiable component in the value equation for life science products. With that said, acquisition cost no longer provides the primary indicator of economic advantage for an intervention. Today, fueled by technology advances that enable insights into population health data and condition cohorts, the healthcare ecosystem and its participants have evolved towards increased precision and clarity regarding the total cost of care and the relative value of the components of care. This will continue to have a profound impact on the way in which life science companies conduct business with its stakeholders, including patients, providers, payors, and (supply chain) partners.

Insight into the relative value of interventions and treatment protocols is becoming increasingly universal. The insights found in structured and unstructured data sets have equipped payors and providers to evaluate the “real-world” efficacy, safety and relative value of medical interventions in near real-time. This is transformative to the negotiation process for life science products as payors and providers now possess a powerful lens into the relative efficacy arguments that characterize many negotiations in life science. The leveling of the information advantage is occurring at a time when pharmaceutical and medical device manufacturers face reduced opportunity windows, resulting in a significant reduction in first-mover advantage.

So, what does this mean for life science companies? Today, more than ever, life science companies must develop and sustain deeper, more meaningful conversations with its stakeholders. Life science companies must address each stakeholder uniquely and consistently.

1. Determine the relevance of its competencies in manufacturing, operations, marketing, and customer support, including the analytic competency required to support the economic relationship with the customer.

2. Assess competencies relative to current needs in the marketplace, future needs, and to the competition.

3. Identify the product, service, and economic offer that can be applied broadly to the market and narrowly to patients, providers, and payors.

This is exactly the intersection where Six Bridges equips the life science company. The Six Bridges path equips account teams and account executives to understand its ecosystem and the forces operating in the ecosystem so that the organization can secure shared commitment with its audience in value-based negotiations.

Six Bridges requires the organization to:

8 www.hixgroup.com

“Common threads operating

across the patient, provider

and payor conversations must

be identified to ensure the life

science company is positioned

for success in the new, value-

based healthcare ecosystem.”

The discipline with respect to the sequence of the Six Bridges path is critical to ensuring optimal positioning in the negotiation. The sequence of the bridges ensures a comprehensive review of the variables impacting the company’s position, influence, and leverage with the customer. For example, routinely reviewing the organization’s position and distinct offering within the ecosystem, a product of the Intelligence and Inventory bridges, is a part of every successful life science company’s DNA to a high degree. Still, when entering a negotiation, it is necessary to apply the discipline required to ensure each bridge is investigated and explored fully. This will equip the organization and its representatives to discover, in some cases rediscover, the company’s competencies and the relevance of these competencies to the needs and desires of the customer.

Commitment to each bridge will assure the organization and the organization’s representation (the negotiator or the team dedicated to the negotiation) account for context. The bridges and the purpose of each bridge is presented again below.

Clarity results from purposeful action

taken to understand the ecosystem,

its trends, patterns, and participants.

Intelligence Inventory Interrogate Insight Inspire Invest

Define policy and market forces impacting stake-holders in the ecosystem and in the therapeutic segment, including patients, providers, payors, suppliers, and/or distributors.

Capture unique competencies of the organization (relative to competitors) by function, including manufacturing, marketing, clinical, and customer support.

Understand (and influence) the opportunities, issues, and needs unique to the customer and the process milestones specific to the negotiation.

Assess the accumulated intelligence for the ecosystem, market, organization, and customer to arrive at the desired clinical, economic, and operational position.

Translate the organization’s competencies and commitments into advantage for the client and the client’s stakeholders.

Present the clinical, economic, and operational offer components supported by a tactical plan to support the launch of the agreement.

Six Bridges Negotiation 9

Six Bridges

What can the life science company expect from committing to the discipline in Six Bridges?

Organizations committing to Six Bridges can expect better outcomes when negotiating with payors, providers, and partners. The organization can expect to win a greater percentage of its negotiating events, which will translate to: • Apreferredorexclusivestatuspositionwithagreaterpercentageofprovideror payor customers, or • Improvedacquisitioncost(seehowthatworks)and/orservicefromvaluechain partners.

Account Teams deploying Six Bridges will be characterized by1. A deeper appreciation for the organization’s functional area competencies, 2. Possessing defined strategies and tactics across customer segments and customer types, and3. Increased clarity regarding the strategies and tactics the organization must undertake to protect the near-term and long-term future of the organization.

The organization can also expect the discipline in Six Bridges to become ingrained in the organization’s culture, resulting in a significant increase in the number of meaningful conversations the organization has with its customers and supply chain partners. The organization will find that Six Bridges delivers increased consistency across the agreements the organization has with its customers and the healthcare ecosystem. The increased consistency results in the organization delivering value for value so the organization’s return on its negotiated agreements is maximized.

From a customer-facing standpoint, the organization can expect to avoid a greater number of emotionally-charged negotiation events. Instead, the ongoing, meaningful conversation that the organization will have with its customers will yield a mindset of continuous improvement in the partnership between the organization and its customer. Additionally, the competencies that differentiate the organization will become a part of the company’s common language between the account executive and the customer. As a result, competitors will find it extremely difficult to unseat the organization’s position in its market and with its customers.

Ultimately, the Six Bridges organization enjoys shared commitment with a great percentage of its customer base. The conversations that result with the market and customers from this vantage point work to keep the company ahead of its competitors. The conversations with the market build on each other, with less and less time dedicated to defending the position in the marketplace and more time dedicated to learning from the healthcare ecosystem. This is productivity defined in the world of the account executive.

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“Six Bridges delivers increased

consistency across agreements

the organization has with its

customers and the healthcare

ecosystem.”

About the AuthorBarryHix,theManagingDirectorfortheHixGroup,isaveteranofnegotiations with payors, providers, and participants across the value chain in healthcare delivery. Hix has represented a leading pharmaceutical manufacturer, a healthcare provider, medical device companies, and healthcare technology companies as an account executive, a division leader, a Chief Executive Officer, and as a contracted consultant. The experience gained across a broad cross-section of the healthcare ecosystem has equipped him with a unique perspective on the organizational competencies required to create and sustain meaningful and profitable conversations with healthcare’s unique mix of patient, patient advocacy, provider, and payor stakeholders.

Hix holds a bachelor’s degree in industrial management from the Georgia Institute of Technology, a master’s degree in marketing from Georgia State University, and a master’s degree in public health from Emory University. He has served on boards and as an advisor to health systems, medical device manufacturers, and medical technology companies. Hix has been invited to speak at several national and regional healthcare conferences, including the Federation of American Health Systems, the Global Business Forum on Health, and Healthcare Information and ManagementSystemsSociety(HIMSS).

Today,HixistheManagingDirectorfortheHixGroup.TheHixGroupequips leadership teams in life science industries to assess, determine, and attack the commercial opportunities and challenges facing the client’s business and its markets. To learn more about the Hix Group, please visit http://hix.group.

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The discipline in Six Bridges will empower your

organization, transform your conversation with

customers, and radically improve profitability.

A note to the reader

In subsequent papers, the content will dive deeper into each bridge. The dedicated content to each

bridge will include the critical questions specific to each bridge. The critical questions serve as the

foundation for evaluating the company’s exploration of its position with each bridge. The papers

dedicated to each bridge will also cite case studies to document the rationale for the bridge

and the hazards associated with missing the bridge. Please feel free to message us at

info@hix.group to receive advance copies of the papers in the Six Bridges series.

Barry Hix ManagingDirector,HixGroup

Commercial Strategy Consultants for the Life Sciences Industry

Hix Group | Birmingham, Alabama USA | 205-936-3687 | info@hix.group | http://hix.group

The Covered Bridge A timber-truss bridge with a roof and siding completes an almost complete enclosure. The covering protects the wooden structure from weather, including the additional weight of ice and snow during winter months, and it provides shelter to travelers. Bridges were also covered to ensure horses and cattle were not distracted by the water flowing beneath the bridge when approaching or crossing the bridge. It was believed distracted livestock could be stirred to move too quickly and thereby damage the bridge.

Similarly, the Six Bridges Negotiation protects the organization’s assets and infrastructure, provides shelter for the negotiator, and ensures focus. This explains our association of Six Bridges with covered bridges from the 19th and early 20th centuries.